IRS Signals Potential Changes to Group Tax Exemptions

According to the ASAE website, the IRS has signaled that it might soon alter reporting requirements and filing procedures for group tax exemptions or even discontinue them altogether. “Associations with chapters and other subordinate organizations that qualify for group tax exemptions should closely monitor the developments and potential new regulations,” warns ASAE.

This direction aligns with IRS strategy to ensure open and transparent operation of exempt organizations. Organizations holding a group exemption letter should expect to see a questionnaire from the IRS about the group ruling in the near future.

In June 2011 an IRS Advisory Committee recommended that the tax agency eliminate the option of filing group tax returns. Up to 700 organizations currently file a group tax return, which means that any change to the group exemption ruling will have a huge impact in the non-profit world.